How much can you borrow?

Discounts: Competitive professional package and basic loan discounts are available.

Note: Most lenders restrict the amount you can borrow quite significantly, often to 80% or less of the property value. In fact, several lenders will not lend to first home buyers at all!

Please enquire online or call us on 1300 889 743 to discuss your purchase with one of our specialist mortgage brokers.

What is considered to be an inner city apartment?

Inner city apartments are generally defined by the banks as any unit in a block located in a particular postcode range, generally within the CBD of capital cities. They can often be referred to as high density units or CBD units and tend to have lifts, balconies and sought after views.

Different banks have different definition of what an inner city unit is so different lending policies will apply. In some cases, a block of units must have at least 4 floors or 35 units in the complex to be defined as inner city apartments.

If the unit you are buying is defined by a bank as an inner city apartment then they may restrict the amount of money that you can borrow.

Which postcodes are considered to be ‘high density’?

These vary from lender to lender, however as a general rule, the following postcodes are considered to be a high risk and are assessed by lenders under their inner city policy:

Note that there are variations on these postcodes between different banks.

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers can let you know what restrictions apply for your unit.

Why are the banks so conservative?

There have been periods when the CBDs of several Australian cities were flooded with cheap units. As a result of new developments being constructed, inner city apartments tend to fluctuate in price more often than other types of properties as supply and demand change. Because of these price fluctuations, banks see financing high density units as a higher risk.

Tips for buying an inner city apartment

When you are buying a unit that is close to or in the CBD there is more to consider than when buying a house in the suburbs. We’ve helped countless people to finance the purchase of their high rise unit and as a result we’ve learned a lot about the possible pitfalls.

Being built out

Be careful to make sure the property will not be built out soon, meaning that a new building will soon block your views. Call your local council and they can tell you what development applications are in place in the area.

Size

Ideally try to buy a unit that is greater than 50m² for the internal area excluding balconies and car spaces. If it is more than 40m² but less than 50m² we can still help you to borrow up to 95% however the lenders are more conservative. If you are buying a unit that is less than 40m² then you may be limited to a mortgage of 80% of the property value.

Strata fees

Lifts, pools and gyms add a lot to the strata fees. In particular, when a lift needs to be replaced it can cost several hundred thousand dollars.

We find that properties with amenities such as pools often don’t receive a better rent income, and that the people who live there often don’t use the amenities anyway! For this reason, units in these blocks may have a lower net rent return than other nearby units.

Block size & age

Smaller blocks tend to be better from an investment point of view. This is because there are less strata issues and they have a higher land value as a proportion of total unit value.

Blocks of units that are less than five years old tend to have lower capital growth and brand new units are sometimes sold above market value.

Do some research on the builder if you are buying in a new block as building defects are common and can be very costly.

Nearby developments

If a new development is built right next door to your unit then there will often be 100 + units for sale that could compete with yours in the event that you wanted to sell.

This can work in your favour when you are buying but it can make it near impossible to sell during these times. So please keep in mind that the inner city market tends to fluctuate more than most property markets.

Do you need a mortgage?

Our mortgage brokers are experts in financing the purchase of high rise apartments in the CBD.

We know the lending policies of over 30 lenders

We have specialist knowledge as our mortgage brokers come from the credit departments of major banks!

Most of our services are free

Help nationwide

Please call us on 1300 889 743 or enquire online and we can help you to work out how much you can borrow and which lenders you qualify with.

Banks do lend for inner city apartments, but the problem is that their prices can fluctuate more than other property types. There have been moments when there were so many units on sale that all their prices dropped. This is seen by lenders as a big risk since they could make a loss by lending you the money to buy these units.

Banks usually have certain postcodes and suburbs that are considered to be high density and have a higher risk. Having said that all lenders have their own policies regarding inner city units and there are lenders who will approve your home loan if you can meet their requirements.

pm

I need a loan for an apartment in surfers paradise. I have full time job 33 k in bank and looking for a 1 bed 250k to 290k. Cannot use combank anz or national. Have clear credit rating. Is it possible?? Considering post code restrictions.. more than 10 units in building..and only 10 percent deposit. First home buyer here.

Hi pm,
The Gold Coast is seen as a high risk area by many lenders but some can consider loans up to 95% of the property value. If the property is 40m2 internal area (ideally >50m2) and then we can lend 90% or 95%.
Your income may not be enough for the loan size, can you do extra hours?
Hope that helps.

pm

Yes was looking at <50m2 income is 52k per year plus approx 20k in overtime. I have 90 percent LVR. Is buying in surfers highrise going to be possible?

We’d need to know internal area in m2, balcony in m2, car space in m2 and is it a studio OR a 1br (is there a wall between the living and bedroom areas)? If you have the address also let us know.
Is there a reason you don’t want to apply with NAB, ANZ or CBA?

pm

O.k… have looked at a few most have seperate areas with walls although i wouldnt mind a studio with a view. I have filled out the form and will discuss with one of your brokers. Thanks

No problem. If you find one >50m2 then we’re very likely to get you an approval for the amount you need. Best of luck buddy

Hanson

Buying an inner city unit seems okay and I think I can qualify but I also have another option in mind, which I’d like to get clarified. I’m also thinking of building a property so will it be okay to borrow 100% for the construction?

Yes, it is possible to borrow 100% of the land and construction costs but you’ll need to have a guarantor. However, be aware that many lenders don’t allow “loan increases” on guarantor loans. What this means is that if you buy the land and then apply for the construction loan later, it may be declined!

Anderson

If I get my dad to guarantee my home loan, when can I have him removed as the guarantor?

Hi Anderson,
When it comes to removing the guarantee from a guarantor home loan, how much you owe matters. The most ideal time to remove the guarantor would be once you’ve paid off your loan to 80% of the property value. This way, you can then internally refinance (or go with another bank) and remove the guarantor without having to pay any lenders mortgage insurance. Please check out this page for details and additional info:https://www.homeloanexperts.com.au/guarantor-home-loans/removing-a-guarantor-guarantee/

Mitul Ahir

i am thinking to invest in small apartment(mostly they are 20-30squire meters) in melbourne cbd near swanston st. looking at realestate.com.au some of 1bedroom apartments are costing about 230k-270k with rental return from 6%-8%. i can pull 15%-20% deposit. is it good idea to invest in if the rent is paying off the mortgage. i am not worrying about not increasing asset value in future(as long as they pays off the loan). Would bank loan against those small apartment?

Hi Mitul,
We can lend 80% of this type of unit. We can’t comment on if it’s a good investment or not. The minimum size is 18m2 however I’d recommend that you don’t pay a deposit until you have formal loan approval as sometimes these properties have other concerns for a lender.

Fiona

Hello, I am looking to invest with a 5% deposit on a $300K apartment in Brunswick. Will banks still lend out for inner city (5km out) apartments to 1st home buyers?

I’m living and working in Darwin and I’m planning to buy a property in Fannie Bay for $500,000. I’d recently read in a mortgage magazine that banks have restrictions lending in inner city suburbs. Will this policy affect me?

Hi Farkera,
Different banks have their own definition of what an inner city unit is so different lending policies will apply. Getting approved usually comes down to the size of the unit (less than 50 sqm may not be acceptable to the lender) and whether it’s part of a large of block of units. In the case of the latter, it’s considered a “high density unit” because there is a heightened risk of selling the property at a reasonable price should the local market take a turn for the worse and the bank needs to recoup their losses. Please contact us and find out how much you can borrow for this property.

Piggins

Why there are restrictions in the inner city apartments? Please, could you shed some light on this as I’m confused as these are the most-sought-after locations and the bank is hesitant to give a loan to you for those properties?

Hi Piggins,
Inner city apartments are generally defined by the banks as an unit in a block located in a particular postcode range, typically within the Central Business District (CBD) of capital cities. They can often be referred to as high-density units or CBD units and tend to have lifts, balconies and sought after views. Various banks have a different definition of what an inner city unit is so different lending policies will apply.
Inner city apartments tend to fluctuate in price more often than other types of properties as supply and demand change. Because of these price fluctuations, banks see financing inner-city apartments as a higher risk.

I have 50k saved up in genuine savings and talked with a broker about buying an inner city apartment or close to the CBD.

Most are priced between 350-400. They mentioned that there is tighter lending criteria for a one bedroom apartment, namely that you’d have to meet the 80%. Is this relatively true? Do the banks not consider using LMI for one bedroom inner city apartments? I thought I had a good enough amount but I suppose I have to save much more to get to a 20 % figure to reach $380,000 property! I am a prospective first home buyer.

Hi Franky,
Yes, most lenders would generally only lend upto 80% for a single bedroom inner city apartment. However, some standard lenders are prepared to go up to 95% using LMI. We understand this context can be tricky as a first home buyer but we can get good lenders to accept this kind property on a case by case basis.
If you would like, please go to https://www.homeloanexperts.com.au/free-quote/ for a free enquiry and we can contact you to discuss on this further to find the right solution for you.

Jackiemt

I’m planning to buy an investment property in Windsor. The property is valued at $760,000 and I want to borrow as much as possible. Will lenders allow me to borrow 95% for this property?

Hi Jackiemt,
Windsor is considered to be a high-risk area (due to high-density) and is assessed by lenders under their inner city policy. Hence, they may restrict your loan to 80-90% of the property value. But that’ll also depend on the type of the property. For example, if you are buying a unit in a building that has more than ten units in it, most lenders may restrict your borrowing to only 80% of the property value. However, please note that there are variations on these postcodes between different banks. Call us on 1300 889 743 and one of our mortgage brokers can let you know what restrictions apply to your property.

We’re experts at finding the right home loan solution for our customers